Retail shares escaped the worst of another late-day swoon on Wall Street on Thursday but couldn’t get away unscathed after investors pulled back following Standard & Poor’s reduction of General Electric Co.’s outlook to “negative” from “stable.”
After spending most of the day in positive territory, the Standard & Poor’s Retail Index dropped 1.4 percent to 286.61. It fared better than the Dow Jones Industrial Average, which dropped 2.5 percent to 8,604.99, and the S&P 500, down 2.1 percent to 885.28. Both retreated quickly in the late afternoon after S&P lowered its outlooks on both General Electric Co. and its General Electric Capital Corp. (GECC) unit, based principally on concerns about GECC’s effect on GE’s gold-standard “AAA” long-term credit rating.
“GECC will account for about a third of GE’s earnings in 2009 — or less if worse-than-expected credit losses further reduce GECC’s earnings,” wrote S&P analyst Robert Schulz. “Even with its current stand-alone credit profile of ‘A-plus,’ GECC remains one of the world’s most profitable and highly rated financial institutions.”
However, he said, “fundamentals-based earnings and cash flow could decline sufficiently during the next two years to warrant a downgrade.”
GE’s commitment to the financial unit has been demonstrated in recent months by the infusion of $5 billion in equity into GECC and the reduction of GECC’s dividend payout to GE to 10 percent of net earnings from 40 percent.
The status of GECC is critical to the apparel and retail industries because it provides credit to consumers as well as retailers and wholesalers. It provided financing to Goody’s Family Clothing Inc. when the retailer entered bankruptcy in June and again when the firm exited Chapter 11 in October. Goody’s is reportedly running low on cash yet again. GE also extended financing to Steve & Barry’s prior to that company’s bankruptcy and subsequent liquidation and to the troubled Finlay Enterprises to help with the 2007 acquisition of Bailey Banks & Biddle. Lord & Taylor and Gottschalks, among many others, also have credit arrangements with the firm.
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)